Estate planning is essential for protecting your family’s inheritance and legacy. That said, creating a plan that works for your unique goals can often be riddled with potential pitfalls if you and your estate planning attorney are not careful.
What are these common mistakes, and how does avoiding them provide additional security for you and your loved ones?
Let us discuss this in today’s blog post.
Please Be Wary of These 9 Estate Planning Mistakes
An outdated plan
Next to not having a plan in place, not keeping your plan updated is one of the more egregious estate planning mistakes you can make. Think of all the things that happen over time (additional children, increase or decrease in wealth, divorce, death, new business ventures, declines in health). Wills, Trusts, and even a Power of Attorney are not meant to be drafted and promptly thrown into a drawer for a later date. They are living, breathing documents. As your life and circumstances change—and they will—so should these pivotal documents. Regular updates ensure they reflect your current wishes and life changes.
Beneficiary mistakes
Choosing your beneficiary is crucial in estate planning. Common estate planning mistakes include designating beneficiaries without intent and not updating them. Carefully consider your beneficiary options and ensure your assets go to the intended recipients. Update your beneficiaries after major life events and ensure they match across all documents and accounts.
Uninformed loved ones
Communication in estate planning is vital due to its complexity. Common communication mistakes include unclear asset delegation. Set clear expectations early to avoid any confusion. Regular conversations ensure everyone is aligned, preventing future legal battles over assets.
Procrastination
For many older adults, the topic of their mortality is so painful that they refuse to discuss it at all. And even if they ultimately decide to get their estate planning affairs in order, they may procrastinate until it is too late. For younger adults, the topic is something they think is reserved only for the older crowd. So, they procrastinate, too. The problem is that while you are procrastinating, the unexpected happens. Waiting until another day will only make things more challenging to plan for.
Not planning for incapacitation
Estate planning is not only for the day you die. What if you are in a car accident that results in you being in a coma? Who will run your business? Who has the power to manage your personal affairs and pay your bills? Thinking that becoming incapacitated for any reason will not happen is one of many estate planning mistakes to avoid. Your estate plan should be flexible enough to plan for both the expected and unexpected.
Choosing the wrong trustee
A trustee is pivotal to ensuring your wishes are carried out in death or incapacitation. But choosing who that person(s) is should be a carefully thought out decision and not based solely on age or how long you have known them. Your trustee should be familiar with the job’s demands or have a background in whatever duties you are asking them to do. They should also be willing to learn quickly and step in to make tough decisions.
Estate tax mistakes
The federal government levies estate taxes on all assets passed to heirs, but these laws differ at the state level. A common estate planning mistake is not considering these laws. Talk to your estate planning attorney about researching federal and state estate tax laws. Seek professional guidance to understand them, ensuring you know exactly what you are leaving to your heirs.
Gifting mistakes
It is also important to consider the implications of asset-giving for a smooth transition after you are gone. Mistakes include insufficient funds to pay gifts to heirs. Ensure your Will specifies where cash gifts should come from and that you have the means to cover them. Without enough funds, some assets might need to be sold to cover the cost.
Doing your own estate planning
We have written in previous blogs about the availability of fill-in-the-blank templates online for Wills, Trusts, and other important documents. While this is a quick and inexpensive option, the odds of having a document that cannot fully protect your family and will not stand the test of time exponentially increase. Having a professional draft your Will ensures proper legal terminology and compliance with state laws.
Call Nelson Law Group Today!!
Having an estate planning attorney in your corner is imperative if your goals are to protect your family’s future for years to come. If you have any questions, call our knowledgeable staff at Nelson Law Group, PC. Our staff is always available.